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Revealed: Details of Japanese Regulator’s Orders to Censured Exchanges

Japan

Regulation

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated:

June 26, 2023

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Further details have emerged as to what Japan’s financial regulator, the Financial Services Agency (FSA), requires of the cryptocurrency exchanges it hit with business improvement orders last week.

Six major Japanese exchanges were handed a list of demands, including BitFlyer, Japan’s largest cryptocurrency exchange, which has now stopped accepting applications for new accounts.

Per media outlet Zia, the FSA has told all six of BitFlyer, QUOINE, Bitbank, BTC Box, Bit Point Japan and Tech Bureau to do the following:

Establish a system for dealing with money laundering and terrorism financing-related matters.
Shore up customer protection.
Create a risk management network for dealing with new tokens.

The FSA has also requested some of the exchanges to create effective management systems and improve the way they handle customer assets.

BitFlyer, meanwhile, has removed promotional images of popular actress Riko Narumi from the main banner of its website. Narumi had become the “face” of BitFlyer during its most recent marketing drive. The company has replaced these with a large banner explaining, “All of our employees will solemnly accept your suggestions and we will respond in earnest in due course. We are currently suspending new customers’ account creation on a voluntary basis. We are doing so in order to do our utmost to build a proper service management system and improve our offerings.”

Zia points out that something appears to have been amiss with BitFlyer beginning in May, when the company took to Twitter to deny it had suffered “unauthorized access” to its network, a claim it reiterated in early June. On June 11, meanwhile, the company tweeted a refutation of “social media reports” regarding an “[FSA] business suspension order to be issued [on June 12],” warning customers to beware fake news.

All six of the companies hit with business improvement orders last week were part of the “first wave” of 11 exchanges handed operating permits by the FSA last year. This is evidence, say Japanese analysts, that the FSA is toughening its policing in the wake of the damaging Coincheck hack.